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How do families make effective wealth decisions?

Defining the purpose, process and perspective of family wealth

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Family wealth decisions are often difficult. Through this paper we seek to help individuals and families enhance their own abilities to successfully navigate their decision-making. These three questions are the backbone of developing structure in your family, and the backbone of this paper.
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Purpose

What is the core purpose of our wealth?
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Process

How might we foster a culture of lifelong learning for our family?
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Perspective

What steps can we take to develop the qualities and skills we want?

Patricia and Michael Parker1 spent decades building their family business by taking risks, pushing for strategic growth, and relying on instinct and hard-earned experience in their field. But when their children became teenagers, they began to feel out of their element when it came to managing their personal wealth and discussing it with their family. The mentality that allowed them to build wealth was not the same mentality that would preserve their wealth—or even effectively pass it down. They quickly found supporting family members in building financial knowledge and skills was not the same as running a successful business.

Our goal is to support wealthy families and their advisors to make more effective decisions around wealth. To do so, we combine three elements:

  • Our research
  • Findings from the field of behavioral economics2
  • Our experience in working with families like the Parkers

In this whitepaper, we’ll lay out the changes a family such as the Parkers would make to actively develop their family culture to work with the opportunities and challenges that managing wealth brings—both for wealth creators and the rising generations.

Read the full paper to discover all of the tools and guidance we provide to help families make effective wealth decisions, including a clear and concise decision making plan, and an in depth look at the difficult topics surrounding wealth decisions, such as:

  • Outcomes Far in the Future
  • The Need for Discussion Around Decisions
  • Thinking About How We Make Family Wealth Decisions
  • Learning (and Refining ) by Doing

 

Read The Full Whitepaper

1 The Parker family represents a compilation family drawing directly from our experience, with identifying details changed to preserve confidentiality.

2 Behavioral economics combines the disciplines of psychology and economics to explain why we don't always make rational economic decisions. The field identifies and examines the biases that influence our actions, and offers insights to encourage people to make better informed decisions.

 

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Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.

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This material is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory (including financial planning) and other services. Additional information is available in our Client Relationship Summary. 

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